Navistar (NAV 26.50, +2.66) is on track to begin higher by 11.2%
after beating quarterly expectations and issuing upbeat guidance. The
pre-market gain has helped the stock erase its entire loss from yesterday.
The manufacturer of commercial trucks, buses, defense vehicles, and engines reported above-consensus fourth quarter earnings of $1.89 per share on a 27.7% yr/yr jump in revenue to $3.32 bln, which was also ahead of expectations.
Navistar's adjusted earnings before interest, tax, depreciation, and amortization grew 42.0% to $826 mln, representing the sixth consecutive year of annual growth.
Core volumes, which include sales of Class 6-8 trucks and buses in the U.S. and Canada, jumped 45.0% while the company's market share of the Class 8 segment increased to 13.5% from 11.8% one year ago.
Furthermore, the company increased its heavy retail market share by 2.5 share points yr/yr while Navistar's school buses saw their retail share improve by 1.3 share points. The company generated $307 mln in manufacturing free cash flow during the fiscal year.
Looking at the segment breakdown, profit in the Truck segment grew 75.9% to $197 mln. Higher volume in core markets and strong results from the defense unit were partially offset by higher commodity and structural costs and supplier constraints.
Profit in the Parts segment totaled $156 mln, down from $157 mln generated one year ago. Higher Fleetrite brand sales were offset by higher freight-related expenses and internal allocation of development, engineering, and selling, general & administrative expenses.
Global Operations segment recorded a profit of $4 mln, representing yr/yr growth of 300.0%. Volume growth was supported by improvements in the Brazilian economy and cost reduction benefits related to restructuring efforts undertaken in early 2018.
The Financial Services segment generated a profit of $26 mln, which was roughly in-line with last year's result. Higher financing revenue was offset by higher borrowing costs.
Going forward, the company expects that revenue for fiscal 2019 will be between $10.75 bln and $11.25 bln. The company expects adjusted EBITA between $850 mln and $900 mln while retail deliveries of Class 6-8 trucks and buses in the U.S. and Canada are expected between 395,000 and 425,000 units. Class 8 retail deliveries are expected between 265,000 and 295,000 units.
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